Israeli officials pointedly refrained from commenting on reports in the Turkish media – for the second time in two months – that the two countries were on the cusp of signing a compensation deal that would end the long-running diplomatic saga over the Mavi Marmara incident.

Turkey’s Hurriyet Daily News reported on Monday that the two sides were close to an agreement on compensation payments to the families of the nine Turks killed onboard the ship in May 2010 as it was trying to break the blockade of the Gaza Strip.

In a reflection of the sensitivity of the issue, neither the Foreign Ministry nor the Prime Minister’s Office would comment on the report. A similar report was published by Hurriyet in December.

The paper on Monday quoted a diplomatic source as saying there were “positive developments with regard to fixing the compensation issue. An agreement is almost ready and is waiting for the finalization of some minor issues before being submitted to the two countries’ leadership.”

The paper did not mention a sum.

In July, Turkish Deputy Prime Minister Bulent Arinc said the reason for the deadlock in compensation talks was not the money, but Israel’s unwillingness to admit that payments would be for a wrongful act.

“Israel should accept that it’s paying this money as a result of its wrongful act.

Nothing less than this will be accepted,” Arinc said at the time.

Prime Minister Binyamin Netanyahu phoned Turkish Prime Minister Recep Tayyip Erdogan last March and offered an apology for any operational errors that might have led to the deaths. The call came at the urging of US President Barack Obama, who was visiting Israel at the time.

It was made from Ben-Gurion Airport just before Obama left the country.

Israeli officials said the apology had been very carefully crafted so as not to admit any Israeli legal culpability, and that Israel would not sign a compensation package admitting wrongful action.

An agreement on compensation is expected to be followed shortly by an exchange of ambassadors and resumption of full diplomatic ties.

Erdogan’s AKP Party is facing crucial municipal elections in March, and Hurriyet speculated that the prime minister might use the agreement as a foreign policy “victory” in the same way he did when Netanyahu apologized.

An Israeli delegation headed by National Security Adviser Yossi Cohen and including Joseph Ciechanover, an envoy from the Prime Minister’s Office, and acting Foreign Ministry director- general Nissim Ben-Sheetrit, traveled to Istanbul in December to discuss the issue with Feridun Sinirlioglu, undersecretary to the foreign minister. Sinirlioglu is a former ambassador to Israel.